The fund, which manages $10.1 billion, is considering the
sale as part of the iron ore company’s planned initial public
offering, said the people, who declined to be identified because
the sale is confidential. Ferrous is seeking to sell $350
million to $400 million in new shares in its IPO to fund its
iron ore operation in Brazil, one of the people said.

Harbinger, the biggest holder of Ferrous, is the largest
shareholder in New York Times Co. and counts stakes in mining
companies Cliffs Natural Resources Inc. and Freeport McMoran
Copper & Gold Inc. among its top 10 holdings. Last month it sold
A$150 million ($134 million) of stock in Fortescue Metals Group
Ltd., Australia’s third-largest iron ore exporter.

The fund, based in New York, is expected to agree to hold a
portion of its current stake for a defined period, one of the
people said, declining to elaborate. Other shareholders are also
seeking to sell some of their equity as a secondary part of the
planned IPO, the person said.

Ferrous may begin meeting with potential investors next
week and aims to start trading in London by early June, two of
the people said.

Needing Funds

JPMorgan Cazenove Ltd., Morgan Stanley and Deutsche Bank AG
are lead arrangers for the IPO, three people familiar with the
sale said in March. BMO Capital Markets, Liberum Capital Ltd.
and RBC Capital Markets are co-lead arrangers, the people said.

Ferrous said March 17 it reached sales agreements with
Chinese steelmakers Jiangsu Shagang Group Co., Beijing Shougang
Steel Group and an unidentified state-owned company. It’s in
other supply negotiations that may give participants in the
talks a stake in the company or a role in its funding, Ferrous
said in a statement.

The company, which had about $493 million of cash as of
Dec. 31, is seeking funds to build the $3 billion first stage of
the Viga mine project, according to a Feb. 3 statement on its
website.

Ferrous shelved an IPO in 2008 as commodity prices slumped
and world economies slowed. The producer was set up in 2007 and
raised $1.26 billion from private placements between June 2007
and August 2008, according to its website.

Planned Borrowing

Bob Graham, director and head of business development at
Ferrous, said in November the company was seeking $2.7 billion
through a combination of debt, an IPO and investment from a
strategic partner. Ferrous intended to borrow about $1.3
billion, according to Graham, a former head of Rio Tinto Group’s
Brazilian unit.

Ferrous is seeking to start output by the end of 2013 at an
initial rate of 25 million metric tons of iron ore a year. A
second stage expansion of its projects is planned to boost
production to 50 million tons a year by the end of 2016.

Chairman Gordon Toll previously held the role at Fortescue,
controlled by Australia’s richest man Andrew Forrest. Falcone’s
Harbinger is also a shareholder in Perth-based Fortescue.